Obamacare just raised your health care premium by $63

posted at 12:41 pm on December 11, 2012 by Mary Katharine Ham

If you’re a member of the mainstream media, you’re “surprised” by this in the same way that every bad jobs report is “unexpected.”

Among the regulations being rushed out the door by the Department of Health and Human Services 32 months after Obamacare passed is a requirement that every plan in America be subject to a $63 fee. That $63 is part of a fund to subsidize people with pre-existing conditions, who are more expensive to cover but whose costs must be transferred to healthier individuals in the new system.

Reporting suggests the costs could hit 190 million health care plans held by individuals or provided by employers. The AP:

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Do tell. Who could have predicted this? More on the fund we’re creating:

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program “is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all,” the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to “contributions” without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Mr. Obama’s expansion of coverage to the uninsured.

You see, we’re “lowering medical expenses and premiums for all” by…raising them for pretty much everyone. This is such a sweet deal.

But don’t worry. It’s temporary. The fee starts at $63 in 2014 and it gets lower every year until it’s phased out in 2017 because, obviously, people with pre-existing conditions will stop costing more money after that. Right, and “The Bachelor” never used the Fantasy Suite for anything more than a soda pop and a game of Scattergories with all those other women before he proposed to you, girl. You know he loves you!

In the debate over the looming fiscal cliff, U.S. President Barack Obama often plays down any adverse economic impact from letting the 2001 and 2003 tax cuts expire for high-income Americans, claiming that the top tax rates would merely return to where they were during the Clinton years.

Unfortunately, the president’s claim is incorrect because he ignores the impending arrival of the unearned income Medicare contribution tax, which will further raise tax rates on income from saving.

Scheduled to take effect on Jan. 1, the tax, which was adopted as part of the 2010 health-care law, is a 3.8 percent levy on interest, dividends, capital gains and passive business income received by taxpayers with incomes exceeding $200,000 (or $250,000 for couples).

Because the new tax was added to the health-care law late in the process without congressional hearings, it received little attention at the time. With only a few weeks left before it takes effect, it remains largely unknown…

One problem with the unearned income Medicare contribution tax is the name Congress chose for it, which is a triple misnomer. The income that will be subject to the tax isn’t unearned — it is earned by savers who receive market rewards for delaying consumption and providing funds to finance business investment.

Also, because the proceeds will be paid into the general treasury, the tax will have no financial link to Medicare. And, of course, the tax will be a compulsory payment, not a voluntary contribution.

As you’ll remember, the president promised throughout his first campaign for president and the contentious health care debate that his plan would lower premiums for Americans by as much as $2,500 annually.

“I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family’s premium by up to $2,500 a year.”

As with most Obama promises, this one has been modified and hemmed and hawed and denied into near non-existence, but here he is offering a super-qualified variation in 2012. Let’s see how that one holds up:

“The other thing we’ve done is to say, what are the critical needs of small business? A lot of time, one of the biggest challenges is to make sure that you, as a sole proprietor, that you can get health insurance for you and your family. So when you hear about the Affordable Care Act — Obamacare — and I don’t mind the name because I really do care. That’s why we passed it. You should know that once we have fully implemented, you’re going to be able to buy insurance through a pool so that you can get the same good rates as a group that if you’re an employee at a big company you can get right now — which means your premiums will go down.”
— President Obama, campaign speech in Cincinnati, July 16, 2012

The Washington Post assesses this much more modest, qualified version of the original promise at “Three Pinocchios,” conceding what the rest of us have known for quite some time— requiring 10 Essential Health Benefit categories for every qualified plan, adding those with pre-existing conditions to the rolls, getting rid of simpler, cheaper catastrophic plans and mini-meds for the young and healthy, changing age band requirements to limit how much more companies can charge for relatively high-risk older customers, and factoring in all the taxes and fees in the law will actually make coverage for the average person more expensive, not cheaper. But the Post is pretty sure you’ll like what you’re getting even if it’s really expensive and nothing like what you were sold:

The good news is that there would be a significant expansion of people with health insurance. And, after tax subsidies, many people may experience premium decreases. One could argue that overall there are more winners than losers.

But the bad news is that, on average, premiums almost certainly will go up — with some people really getting hit with increases. “Based on the analysis of the individual market, there is a concern for rate shock to a material portion of the population,” a report for Rhode Island said. “The individuals who currently are qualified for preferred rates will be seeing large increases in their healthcare premiums if they do not qualify for premium subsidies.”

The newly announced rules limit insurers to charge their oldest customers no more than three times as much as younger ones. As shown in the following chart based on estimates by international management consulting firm Oliver Wyman, the rule will force insurers to hike rates for 18- to 24-year-olds by 45 percent even as rates for those 60 and older drop by 13 percent in most states.[2] That means a 22-year-old waitress paying $2,068 for her health insurance will have to fork over $3,000 when Obamacare takes effect.[3] And these figures even underestimate the actual impact.

Up until now, in many states, the maximum age band ratio, which is the wretched term for this, was 5:1. Insurance carriers are right now frantically preparing for the deadlines to request rate hikes from each state’s insurance commission as these regulations get sent to actuaries. The news is not going to get brighter.

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